Recent repurchase of company shares demonstrates confidence in the
fundamentals of the business as well as efforts to enhance shareholder
returns

November 24, 2011 06:58 AM Eastern Standard Time

HONG KONG--(BUSINESS WIRE)--Amidst a depressed global economy and the decline in manufacturing,
Alibaba.com Limited (HKSE:1688) (1688.HK), the world’s leading small
business e-commerce company, today announced unaudited financial results
for the quarter ended September 30, 2011. With weaknesses in the US
economy and debt troubles in the Eurozone threatening to spin out of
control, Alibaba.com remains cautious of the global economic outlook,
which may have a prolonged impact on China’s export sector. Despite
these challenges, Alibaba.com announced a revenue increase of 10.6
percent year-on-year (y-o-y), driving y-o-y diluted EPS growth by
18.1 percent. Revenue from Alibaba.com’s international marketplace also
increased by 11.8 percent y-o-y, attributable primarily to the increase
in revenue from Value-Added Service (VAS) and contributions from new
businesses, including Vendio, Auctiva and One-Touch. In addition,
revenue from the China marketplace increased 13.9 percent y-o-y,
attributable to the increase in revenue from VAS.

Alibaba.com’s quarterly results reflect the Company’s on-going platform
enhancement activities, announced earlier this year, which have not
yielded immediate meaningful financial contributions. The continuous
platform enhancements are set to improve the user experience, supplier
quality and trust and safety measures.

Q3 2011 Financial and Operational
Highlights

FINANCIAL HIGHLIGHTS (UNAUDITED)

Q3 2010RMB million

Q3 2011RMB million

YoYChange

Q2 2011RMB million

QoQ

Change

Revenue

1,449.3

1,602.4

+10.6%

1,623.8

-1.3%

Earnings before interest, taxes and amortization (“EBITA”)

410.1

410.4

+0.1%

486.3

-15.6%

Profit attributable to equity owners

366.1

409.7

+11.9%

464.5

-11.8%

Share-based compensation expense

108.9

93.2

-14.5%

90.7

+2.8%

Deferred revenue and customer advances

3,868.9

4,141.7

+7.0%

4,059.7

+2.0%

Recurring free cash flow

731.9

413.4

-43.5%

451.4

-8.4%

Pre-share-based compensation expense EBITA margin (%)

35.8%

31.4%

-4.4%pts

35.5%

-4.1%pts

Earnings per share, basic (HK$)

8.3 cents

9.8 cents

+18.1%

11.0 cents

-10.9%

Earnings per share, diluted (HK$)

8.3 cents

9.8 cents

+18.1%

11.0 cents

-10.9%

OPERATIONAL HIGHLIGHTS

September 30,2010

September 30,2011

YoY

Change

June 30,2011

QoQChange

Q3 2011Net change

Registered users

56,722,482

72,777,255

+28.3%

68,900,278

+5.6%

+3,876,977

International marketplace

14,921,668

23,751,148

+59.2%

21,625,081

+9.8%

+2,126,067

China marketplace

41,800,814

49,026,107

+17.3%

47,275,197

+3.7%

+1,750,910

Storefronts

8,199,384

9,557,596

+16.6%

9,195,763

+3.9%

+361,833

International marketplace

1,622,597

1,973,129

+21.6%

1,867,452

+5.7%

+105,677

China marketplace

6,576,787

7,584,467

+15.3%

7,328,311

+3.5%

+256,156

Paying members

750,937

787,653

+4.9%

815,378

-3.4%

-27,725

China Gold Supplier

108,572

107,177

-1.3%

112,191

-4.5%

-5,014

Global Gold Supplier

11,017

8,285

-24.8%

9,245

-10.4%

-960

China TrustPass

631,348

672,191

+6.5%

693,942

-3.1%

-21,751

"With our strong brand and innovative team, we remain very confident in
the long-term future of Alibaba.com,” said Jonathan Lu, CEO of
Alibaba.com. “Despite the stress posed by the external environment, we
will stay focused on upgrading our business model and building quality,
trustworthy e-commerce platforms. We remain committed to our world’s
largest B2B customer base and will continue to evolve our business to
better serve them with a number of initiatives designed to improve
supplier quality and the buyer experience. We expect these initiatives
will positively enhance our financial health, providing additional
performance-based revenue streams, which will take time to fully
implement. While the investments associated with these upgrades to our
business will have an impact on near-term financials, we are confident
we are doing what is right for our customers, both sellers and buyers,
for years to come.”

Business highlights and review

The latest export data shows that China’s export growth has begun to
decline. Under current complex macro conditions, China’s domestic
consumption will take a considerable amount of time before again
achieving strong growth. As expected, the number of paying members
declined in the third quarter due to the execution of long-term plans
set out earlier this year to enhance the user experience as well as
trust and safety measures. As of September 30, 2011, Alibaba.com
registered a total of 787,653 paying members.

During the third quarter, Alibaba.com attracted approximately 3.9
million new users for a total of 72.8 million registered users and now
hosts more than 360,000 new storefronts for a total of 9.6 million.

Alibaba.com’s business fundamentals remain solid with the implementation
of initiatives that provide significant value for new and existing
customers. Confidence in the organization is reflected in the decision
to launch a share buy-back program enabled by the Company’s ample cash
balance in September, with a purchase of 67.8 million shares amounting
to HKD509 million (USD65.3 million) in September and October of 2011.

International marketplace:

Registered users: In the third quarter, the number of
registered users on Alibaba.com increased by 2.1 million for a total
of 23.8 million.

Storefronts: The number of storefronts on Alibaba.com totaled
2.0 million as of September 30, 2011, signifying a growth of 5.7
percent over last quarter.

Trust & Safety: During the third quarter, Alibaba.com
developed services to enhance the level of trust between buyers and
suppliers on the marketplace. These initiatives to enhance a quality
e-commerce platform are paying off. The Company has continued to
execute plans announced earlier this year that centered around (1)
enhancing user quality and user experience, as well as strengthening
the depth and the breadth of user information captured on the
platform; and (2) evolving the business model by developing the
performance-based and transaction-based services. For example, in
September 2011, Alibaba.com announced its “on-site inspection” program
which represents a second level of verification that members are
legitimate business. A platform-wide escrow service (beta) and a paid
order-inspection service are also giving Alibaba.com buyers extra
protection when sourcing online. The number of complaints on frauds
committed by paying members received in September has decreased by 75
percent, y-o-y.

Traffic: Traffic growth on the Alibaba.com e-commerce platform
remains buoyant. The platform’s higher quality supplier base has
attracted more buyers and generated more activities. In September,
overseas daily average traffic in terms of unique visitors saw a y-o-y
growth of 65 percent. Alibaba.com is also developing a multi-lingual
system to present product information in multiple languages to enable
buyers around the world to source more easily, and has brought more
overseas traffic to the international marketplace.

Gold Supplier: As of September 30, 2011, Alibaba.com recorded
107,000 China Gold Supplier members, representing a decline of 5,000
members quarter-over-quarter (q-o-q). Alibaba.com recorded a total of
more than 8,200 Global Gold Supplier members in the third quarter. The
sequential decline in China Gold Supplier memberships was expected,
mainly due to the ongoing tightening of quality control of suppliers
that sets the bar higher for customer acquisition. The price hikes for
membership, effective January 2011, also partly slowed the pace of new
member acquisition. The renewal rate of CGS members, however, has been
relatively stable throughout the year.

VAS: Overall, the progress of VAS development has been on
track. Ali-ADvance has seen adoption increase in the third quarter.
Based on Alibaba.com’s experience in the China marketplace, usage and
penetration of Ali-ADvance will likely require several more quarters
to gain awareness and momentum. VAS revenue contribution has crept up
over the first three quarters of 2011 and approached 30 percent of
China Gold Supplier revenue in the third quarter.

AliExpress: AliExpress continued to grow. Gross merchandize
value (GMV) in the third quarter reduced slightly due to the
termination of PayPal as a payment option on AliExpress in August
2011. This impact was much milder than expected and the average daily
GMV is again trending upward. AliExpress is still undergoing
investment and refinement to focus on platform development, trust and
safety measures and product delivery systems. In particular, during
the third quarter, buyer protection enhancements provided a payment
protection and refund program. The recently-launched “Assurance Plus”
program not only makes the buyer experience on AliExpress safer and
easier, but also serves to raise sellers’ trustworthiness. The
“Assurance Plus” status is available only to qualified suppliers able
to meet necessary requirements and will have the “Assurance Plus” logo
clearly shown on their storefronts.

China marketplace:

Registered users: As of September 30, 2011, Alibaba.com’s
Chinese platform, 1688.com, recorded 49.0 million users marking an
increase of 1.8 million users q-o-q.

Storefronts: The third quarter registered an increase in
storefronts by 256,000, or 3.5 percent.

China TrustPass: By the end of third quarter, 1688.com saw a
decrease of 21,751 China TrustPass members (total of 672,000) mainly
due to the slowing of member acquisition since discontinuing the
individual China TrustPass edition in the second quarter of 2011.
Focus shifted to more user authenticity and, buyer traffic and
experience. The membership renewal rate, however, has remained steady.

Trust & Safety: The Company’s drive to improve the quality
of suppliers on the platform is paying off. Alibaba.com’s Chinese
platform has moved further into capturing more comprehensive user
information on the platform. Since September, all suppliers on the
China marketplace have had to register their real name. This
requirement not only enhances the credibility of information posted by
suppliers on 1688.com but also creates a more extensive user database.
As for user experience enhancement, the 1688.com platform was
overhauled to make it more buyer-oriented and user-friendly. The GMV
of online transactions on 1688.com continue to grow healthily. With
improvements made to suit wholesale buying behavior, wholesale
activities are again beginning to gain traction. 1688.com will
continue efforts in driving more transactions from offline to online
and provide a trusted environment for buyers and suppliers to safely
trade on the platform.

VAS: 1688.com has seen a gradual but modest growth in VAS
revenue over the past few quarters. VAS revenue contributed to nearly
25 percent of China TrustPass revenue in the third quarter.

Liang Wu Xian (previously Wu Ming Liang Pin): Since launching
Liang Wu Xian in the first quarter of 2011 as a B2C transaction
platform, it has undergone continuous refinement. In August, it was
renamed which clearly positioned Liang Wu Xian as a supply chain
management service for Chinese manufacturers that involves
manufacturing control, product quality control, dedicated logistics
and distribution. To ensure buyers can source high quality products
from Liang Wu Xian suppliers, they and their products are required to
be vetted by third-party verification service providers. The value
proposition of Liang Wu Xian is now far beyond that of a pure
transaction platform. The initial focus has been on refining the
business model rather than driving monetization; once quality service
and value are well established, revenue will follow.

Financial results

Alibaba.com continues to report solid financial performance in the third
quarter of 2011.

Alibaba.com continues to play an important role in heading off
challenges and uncertainties in the macro environment by creating value
for users in China and around the world, cementing its position as the
world’s leading small business e-commerce service provider.

Revenue:

Total GAAP revenue: Total GAAP revenue in
the third quarter grew 10.6 percent y-o-y to RMB1.6 billion (USD250.4
million).

International marketplace: Revenue from
Alibaba.com’s international marketplace increased to RMB947.5 million
(USD148.0 million) in the period, an 11.8 percent increase y-o-y and
remained flat q-o-q. The y-o-y growth was primarily due to the
increase in VAS revenue as well as the contributions from new
businesses, including Vendio, Auctiva and One-Touch, acquired in the
latter half of 2010 and the first half of 2011, and from an increase
in transaction-based revenue from AliExpress. Despite the q-o-q
decline in paying members, an increased contribution from
non-membership revenue has offset the reduction in revenue from
subscription fees.

China marketplace: Revenue from
Alibaba.com’s China marketplace (1688.com) increased to RMB560.7
million (USD87.6 million) in the period, representing a 13.9 percent
increase y-o-y and a 1.5 percent increase q-o-q. The growth in revenue
for both y-o-y and q-o-q was mainly attributable to the increase in
revenue from Ali-ADvance and premium placements.

Other revenue: Other revenue was RMB94.2
million (USD14.7 million) in third quarter, representing a 14.3
percent decrease y-o-y and a 23.0 percent decrease from last quarter.
The decrease both y-o-y and q-o-q was mainly due to non-cash
accounting adjustments made by HiChina in connection with preparatory
work relating to its proposed spin-off.

Gross profit: Gross profit increased to RMB1,297.8 million
(USD202.8 million) in the period, up 7.5 percent y-o-y from RMB1,207.2
million (USD188.6 million) and flat from RMB1,308.7 million (USD204.5
million) in the second quarter of 2011.

Gross profit margin: Gross profit margin declined to 81.0 percent
compared with 83.3 percent in the same period last year and was flat
from 80.6 percent in the second quarter of 2011. The decline y-o-y was
primarily due to a higher cost of revenue stemming from the
consolidation of financial results from Vendio, Auctiva and AliExpress,
which have relatively lower gross profit margins.

Total operating expenses: Total operating expenses were RMB936.5
million (USD146.3 million) in the period, representing a 12.6 percent
increase y-o-y from RMB831.9 million (USD130.0 million) and a 9.4
percent increase q-o-q from RMB856.1 million (USD133.8 million). The
increase in operating expenses, for both y-o-y and q-o-q, was mainly due
to increases in staff costs and the consolidation of expenses incurred
by One-Touch. Alibaba.com continues to manage total headcount numbers
with a focus on investing in product development to enhance the user
experience. As a percentage of revenue, total operating expenses were
58.4 percent for the period, compared with 57.4 percent in the same
period last year and 52.7 percent for the second quarter of 2011. The
sequential increase was mainly due to the increase in staff costs for
salary adjustments and various employee subsidy programs introduced in
the third quarter of 2011 for general staff in China (PRC), such as
living allowances and child education allowances.

EBITA: Alibaba.com’s profit margin before interest, taxes and
amortization (EBITA margin, non-GAAP) was 25.6 percent for the
period, a decrease from 28.3 percent in the same period of 2010 and 29.9
percent in the second quarter of 2011. EBITA margin (non-GAAP)
before share-based compensation expense was 31.4 percent for the period,
a decrease from 35.8 percent in the same period last year and 35.5
percent in the second quarter of 2011. The decrease in EBITA margin
before share-based compensation expense y-o-y was mainly due to the
decrease in gross profit margin while the q-o-q decrease was due to an
increase in total operating expenses, mentioned above.

Profit attributable to equity owners: Profit attributable to
equity owners was RMB409.7 million (USD64.0 million) in the period, an
increase of 11.9 percent from the same period in 2010 but a decrease of
11.8 percent from the second quarter of 2011. The y-o-y increase was
largely contributed by the increase in VAS revenue, while the q-o-q
decrease was mainly due to the increase in operating expenses.

Deferred revenue and customer advances: Deferred revenue and
customer advances were RMB4,141.7 million (USD647.1 million) as of
September 30, 2011, representing a 7.0 percent increase from RMB3,868.9
million (USD604.5 million) as of September 30, 2010 and a 2.0 percent
increase from RMB4,059.7 million (USD634.3 million) as of June 30, 2011.
Excluding the effect of the adjustments made by HiChina, deferred
revenue and customer advances were flat from September 30, 2010 and
slightly decreased from that as of June 30, 2011 as a result of a lower
paying customer base.

Recurring free cash flow (non-GAAP): Recurring free cash flow
(non-GAAP) in the period was RMB413.4 million (USD64.6 million),
representing a 43.5 percent decrease y-o-y and an 8.4 percent decrease
q-o-q. The decrease y-o-y was mainly attributable to the decrease in
cash revenue as a result of the tightening of customer acquisition,
increase in income tax paid and the increase in staff cost. The
sequential decline was mainly due to increases in staff costs.

Cash and bank balances: Cash and bank balances as of September
30, 2011 was RMB10,514.0 million (USD1,642.8 million), representing a
25.7 percent increase y-o-y and a 4.0 percent increase q-o-q.

Note: All U.S. dollar conversions are based on an exchange rate of
US$1.00=HK$7.80 and US$1.00=RMB6.40.

About Alibaba.com Limited

Alibaba.com (HKSE: 1688) (1688.HK) is the global leader in e-commerce
for small businesses and the flagship company of Alibaba Group. Founded
in 1999 in Hangzhou, China, Alibaba.com makes it easy for millions of
buyers and suppliers around the world to do business online through
three marketplaces: a global trade platform (www.alibaba.com)
for importers and exporters; a Chinese platform (www.1688.com)
for domestic trade in China; and, through an associated company, a
Japanese platform (www.alibaba.co.jp)
facilitating trade to and from Japan. In addition, Alibaba.com offers a
transaction-based wholesale platform on the global site (www.aliexpress.com)
geared for smaller buyers seeking fast shipment of small quantities of
goods. Together, these marketplaces form a community of more than 72.8
million registered users in more than 240 countries and regions. As part
of its strategy to transition into a holistic platform where small
companies can build and manage their online business more easily,
Alibaba.com also offers Chinese traders a wide array of business
management software, Internet infrastructure services and export-related
services directly or through companies it has acquired including HiChina
and One-Touch, as well as educational services to incubate enterprise
management and e-commerce professionals. Alibaba.com also owns Vendio
and Auctiva, leading providers of third-party e-commerce solutions for
online merchants. Alibaba.com has offices in more than 70 cities across
Greater China, India, Japan, Korea, Europe and the United States.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME FOR THE QUARTER ENDED SEPTEMBER 30, 2011

Q3 2010

Q3 2011

Q2 2011

Q3 2011

RMB’000

RMB’000

RMB’000

RMB’000

Revenue

International marketplace

847,153

947,470

948,973

947,470

China marketplace

492,177

560,741

552,361

560,741

Others

109,945

94,227

122,430

94,227

Total revenue

1,449,275

1,602,438

1,623,764

1,602,438

Cost of revenue

(242,050

)

(304,652

)

(315,028

)

(304,652

)

Gross profit

1,207,225

1,297,786

1,308,736

1,297,786

Sales and marketing expenses

(526,212

)

(529,780

)

(512,075

)

(529,780

)

Product development expenses

(160,258

)

(208,246

)

(186,238

)

(208,246

)

General and administrative expenses

(145,437

)

(198,453

)

(157,741

)

(198,453

)

Other operating income, net

20,783

8,700

7,478

8,700

Profit from operations

396,101

370,007

460,160

370,007

Finance income, net

48,392

94,044

84,323

94,044

Share of profits/(losses) of associated companies and a jointly
controlled entity, net of tax:

(1,740

)

249

(418

)

249

Profit before income taxes

442,753

464,300

544,065

464,300

Income tax charges

(77,036

)

(58,915

)

(79,446

)

(58,915

)

Profit for the period

365,717

405,385

464,619

405,385

Other comprehensive income/(expense)

Net fair value gains/(losses) on available-for-sale investments

220

(940

)

(7,358

)

(940

)

Currency translation differences

(8,894

)

(14,810

)

(7,595

)

(14,810

)

Total comprehensive income for the period

357,043

389,635

449,666

389,635

Profit/(loss) for the period attributable to

Equity owners of our Company

366,066

409,680

464,545

409,680

Non-controlling interests

(349

)

(4,295

)

74

(4,295

)

Profit for the period

365,717

405,385

464,619

405,385

Total comprehensive income/(expense) for the period attributable
to

Equity owners of our Company

357,392

393,930

449,592

393,930

Non-controlling interests

(349

)

(4,295

)

74

(4,295

)

Total comprehensive income for the period

357,043

389,635

449,666

389,635

Earnings per share, basic (RMB)

7.3 cents

8.1 cents

9.2 cents

8.1 cents

Earnings per share, diluted (RMB)

7.2 cents

8.1 cents

9.2 cents

8.1 cents

Earnings per share, basic (HK$) (Note 1)

8.3 cents

9.8 cents

11.0 cents

9.8 cents

Earnings per share, diluted (HK$) (Note 1)

8.3 cents

9.8 cents

11.0 cents

9.8 cents

Note 1:The translation of Renminbi amounts into Hong
Kong dollars has been made at the rate of RMB0.8235 to HK$1.0000 for the
third quarter of 2011 (second quarter of 2011: RMB0.8359 to HK$1.0000
and third quarter of 2010: RMB0.8713 to HK$1.0000).No
representation is made that the Renminbi amounts have been, could have
been or could be converted into Hong Kong dollars or vice versa, at that
rate, or at any rate or at all.